Location: Located in Eastern South America, bordering the Atlantic Ocean
Size: Total area is 8,511,965 sq km (slightly smaller than the US)

Population



Population growth trends and forecast: Brazil is predicted to have an expanding working population which will grow from 125M in 2006 to 147.8M by 2020

Basic overview:

• High interest rates and in the past, low consumer earning power, leading to a mortgage/GDP ratio of 1.7% (the same ratio in the US is 80%)
• Banks were little affected by subprime mortgage lending as the mortgage market is still in its infancy
• 83% of Brazil’s population live in urban areas; a large number of people living in Favelas (settlements on the hill Morro de Favela near the center of Rio de Janeiro); this is also the case with the other urban centers such as Sao Paolo
• Home ownership is at 75% but 85% of all homeowners live in low quality, self built, single room housing units. This segment is looking for higher quality housing units

Current value

• Price/sqm : $1,891
• Rent/month: $1,240
• Rental Yield: 6.56%

Recent trends or stats

• Foreign investors initially started to invest in Brazilian property in the 1990s
• The majority of property investors are from Spain, Portugal and Italy
• From 2006 to mid-2008, property developers in Brazil witnessed large increases in launches and sales

Future trends:

• Developers think that the current crisis is just a temporary issue and demand will pick up; there is strong underlying demand for housing
• The government plan for 1M houses to be built to meet housing demand will help developers in the medium term

What is driving the market?

• Well developed agricultural, mining, manufacturing and service sectors
• High commodity prices and productivity gains helped boost Brazilian exports
• Economic reform packages have been put forth by the government to boost investment in infrastructure and cut taxes
• Strong domestic retail sales (2008 sales were 12% higher than 2007 levels)
• Disciplined and improving monetary policy

Current: GDP is expected to slide slightly for 2009 due to the global crisis, however, the solid financial position of the government and state banks will mitigate the impact of the recession
Recent trend: GDP has grown rapidly for the last several years with the Brazilian economy seen as a market for high growth

Current: 2008 unemployment 8%
Recent trend: Unemployment had been declining for the past several years, with decreases of 10% (since 2003) in urban centers

The currency used in Brazil is the Real. As of May 11, the yen was worth $1 USD = BRL 2.058.
To view current exchange values visit www.xe.com

• Interest rates had been high for the past several years as Brazil was attempting to control hyperinflation
• Real (inflation adjusted) interest rates had remained high, close to 10% since 2000
• Interest rates are expected to fall in the near future to push up the potential rate of growth for the economy
• The benchmark interest rate is 10.25% (the rate was cut on April 29, 2009)

Current: In 2008, Brazil received FDI that trailed only several countries (US, France, UK, China, HK, Russia, Spain) and exceeded several many large nations including Japan, Germany, Italy and India
Recent trend: FDI has grown rapidly, with inward FDI growing at rates of 20%+ per year; growth has slightly slowed since 2007; a large number of foreign companies have been looking to benefit from the large Brazilian market and attractiveness of the stable economy